Qualcomm Soars on Amazon Partnership as Data Center Dreams Take Shape

Qualcomm's recent partnership with Amazon Web Services (AWS) has sparked optimism among investors about the company's growth prospects in the AI data center market.

The multi-year, multi-generation product agreement between Qualcomm and AWS will see the two companies jointly develop custom chips for large-scale AI data centers and advance high-speed optical interconnect technology.

What's noteworthy is that Amazon is not just becoming a standard customer of Qualcomm. An 8-K filing submitted by Qualcomm to the U.S. Securities and Exchange Commission revealed that an Amazon affiliate acquired warrants to purchase up to 25 million shares of Qualcomm common stock at $161.26 per share, with an expiration date of September 3, 2036.

This deal is valued at approximately $4.03 billion if all warrants are exercised. According to Akash Palkhiwala, Qualcomm's Chief Financial Officer, the company expects to begin generating revenue from this partnership as early as December this year and aims to reach $15 billion in data center revenue by fiscal year 2029.

Qualcomm is diversifying its business beyond smartphone processors. The company has already launched its Dragonwing series of data center CPUs and is collaborating with Saudi Arabia's Humain to develop AI accelerators.